1.    The year under review witnessed a sluggish export growth rate of 2.80% in terms of US dollars and 5.92% in terms of rupees for powerloom cotton fabrics and made-ups, as compared to the previous year. The slow-down in the exports of powerloom cotton fabrics and made-ups for the year under review (1999-2000) must be viewed against the backdrop of certain external developments and domestic constraints, for all the products in general, having a critical bearing thereon. Domestic uncertainty arising from out of a variety of non-economic factors also played a role in the slow turnaround in the exports of powerloom cotton fabrics and made-ups thereof.

2.    The East-Asian crisis, which erupted in July 1999, spread rapidly across other emerging economies through 1998. The crisis led to fears of widespread credit crunch and concomitant recession. However, beginning early 1999, most of the economies affected by the crisis had begun to recover, and global economic and financial conditions have improved markedly. The decline in many commodity prices had also been arrested. World trade prices, in US dollars, of non-fuel primary commodities were projected to increase by 2.8 per cent in 2000, in contrast to the declines of 15.7 per cent and 11.2 per cent in 1998 and 1999, respectively. Similarly, prices of manufactures, as represented by unit value index of manufactures exports from G-5 countries (USA, UK, Germany, Japan and France) to developing countries, were expected to increase by 2.5 percent in 2000, as against a decline of 3.9 percent in 1998 and 0.6 per cent in 1999. The recession in Japan deepened during 1998, but economic activity in early 1999 witnessed a sharp rebound. Global growth has bottomed out at 1.9 per cent in 1998 and estimates/forecasts pointed to a recovery to 2.6 per cent in 1999 and 2.9 per cent in 2000. However, there were downside risks including, inter-alia, a slowdown in the United States from the present robust performance, doubts about the strength of the Japanese recovery after a protracted recession and some concerns about the sustainability of the (so far partial) recovery in East Asia. Slower output growth in all the main country groups in 1998 led to a sharp slowdown in the growth of world trade volume to an estimated 4.2 per cent in 1998 and 5 per cent in 1999. World trade volume, though projected to recover significantly to 6.4 percent in 2000 will, nevertheless, be much below the volume growth of 10.5 per cent reached in 1997.

3.    According to the Directorate General of Commercial Intelligence & Statistics (DGCI&S) data, exports in 1998-99 declined by 3.9 per cent in US Dollar value as compared to an increase of 4.6 percent in 1997-98. Continued weak international commodity prices in 1998, however, pointed to a better performance of exports in real terms during this period as compared to the value performance. According to the latest IMF World Economic Outlook, the world prices (in US Dollar) of non-oil primary commodities declined by about 15 per cent in 1998. Manufactures prices also declined in 1998 but by considerably less than those of primary products. Exports in the current financial year, for all products, however, have witnessed a significant turnaround with a growth rate of 12.9 per cent (in US Dollar value) during April-December, 1999 as against a decline of 2.9 per cent in the corresponding period of last year. The buoyancy is explained partly by the revival of world trade on the heels of the East Asian recovery and a modest recovery in some global commodity prices. Low inflation in the domestic economy may have also strengthened the competitiveness of India's exports in global markets.

4.    Structural constraints operating on the demand as well as supply side of our exports contributed to the slow down/decline in exports during 1996-97 to 1998-99. The recessionary tendencies across the world severely affected the demand side of our exports. The reduction in global demand led to a substantial contraction in world trade. The world economy slowed down from 3.2 per cent in 1997 to 1.9 per cent in 1998. World merchandise exports, in value terms, declined by 1.6 per cent in 1998 as compared to an increase of 3.5 per cent in 1997. The decline in exports from the developing countries was even sharper with exports declining by 6.3 per cent as against a rise of 6.3 per cent in 1997. Reflecting continuing sluggishness in the nine months of 1999 in manufactured and commodity prices, there was a further decline of 0.4 per cent in world exports and 0.2 per cent in exports from developing countries. The economic contraction in the East Asian countries resulted in a sharp decline in import demand, which in turn, resulted in a massive turnaround in the current account balance of these countries; the current account balance of the Asian developing countries rose significantly to a surplus of $ 51 billion in 1998 from a surplus of US$ 5 billion in 1997. Since Asia accounts for about one fifth of India's exports, India could not escape the fallout from such import compression. In this context, the recovery of East Asian economies and improvement in the global trade environment augured well for Indian exports in the current financial year.

5.    Imports into the advanced economies, which are India's major trading partners, had also slowed down reflecting both a weak demand and also movements in cross currency exchange rates. The growth rate of merchandise imports (in U.S. Dollar value) of advanced economies remained sluggish at 2.6 per cent in 1998 as compared to 2.1 per cent in 1997. Growth of world merchandise imports, on the other hand, decelerated from 3.3 per cent in 1997 to a decline by 1.5 per cent in 1998. While there has been some recovery in imports into the advanced economies in 1999 with a growth rate of 4.3 per cent, world merchandise imports in the first three quarters of 1999 remained depressed with a decline of 0.5 per cent. Nevertheless, imports by countries like U.K. and Germany remain sluggish.

6.    The movement of the Rupee against the currencies of India's major trading partners in 1998-99 have largely corrected for the appreciation of the rupee in the previous year in real effective exchange terms. The exchange rate has been relatively stable in 1999-2000. The downward movement in the real value of the Rupee has been only modest compared to the East Asian currencies. The cumulative nominal depreciation of the Rupee since the onset of the East Asian crisis in July, 1997 has been of the order of 17.6 per cent as on 2nd February, 1999 as against a depreciation of 65.8 per cent of the Indonesian Rupiah, 32.5 per cent of the Thailand Baht, 35.1 per cent of the Phillipines Peso, 33.8 per cent of Malaysian Ringgit, 21.8 per cent of the Korean Won and 14.8 per cent of the Singapore Dollar. Exchange rate depreciations of such magnitude not only provide increased competition in export markets but also impart enhanced import competition in the domestic market.

7.    Trade Policy reforms over a period of time, with effect from 1991 have sought to eliminate various impediments to promotion of trade in volumes and export growth. The extant EXIM Policy (1997-2002) continues the ongoing process. In the light of the continued slowdown in exports, various initiatives were announced in the recent past, which include;

	Computerisation & electronic communication with exporters to bring about transparency and reduce physical interface between the exporter and the DGFT and to ensure time bound sanction of licenses.
	Duty exemption scheme made more flexible in operation and in the import of duty free inputs.
	Benefit of zero duty EPCG scheme extended to sectors such as textiles, plastics and chemicals by bringing down the threshold limit from Rs. 20 crores to Rs. 1 crore.
	Further rationalisation and simplification in the procedures for operation of the units in EPZ and EOUs.
	A new chapter on export of services recognising the importance of export of services and potential in the sector.
	Exports made by small scale sector manufacturer exporters given triple weightage for the purpose of recognition as EH/TH/STH/SSTH.
	Involvement of states in export promotion.
	An institutional mechanism "Ombudsman" being put in place.
	Issue of Green cards to exporters exporting 50% of their production with a minimum of Rs. 1 crore per year entitling them to various facilities.
	Benefit of SIL to export of branded products.
	To ensure easy access to input and to integrate with the global economy, 894 items were added to the free list of imports. 414 additional items have been put in the SIL list of imports.
	Free Trade Zones to become operational from 1/7/1999 in which the units shall be permitted to carry out any manufacturing or trading activities.

All these measures are forward looking, aimed at raising the level of competitiveness of Indian exports to enable it to capture a larger share of the global commercial market.

8.    The slow down in global growth and international trade has resulted in the emergence/introduction/accretion of protectionist measures in some developed economies which are trade restrictive and unfriendly to some countries. These have primarily taken the form of non-tariff barriers (NTB) such as increasingly stringent quality, testing and labelling standards, frivolous anti-dumping moves, vexed problems relating to environment, ecology and labour.

9.    On the domestic front, infrastructure bottlenecks such as poor port facilities, woeful road conditions, inadequate and irregular power supply, less-than satisfactory telecommunication systems, etc., high transaction costs, labour inflexibility, etc. have had an adverse bearing on export production and promotion, apart from the other problems in the areas of export policies and procedures, indirect taxes and other local taxes & banking & fiscal issues. Despite tremendous potential, the lack of long term policies continue to hinder exports.

10.    Notwithstanding all the above-mentioned vagaries, powerloom cotton textiles registered an export growth rate of 5.92% in the year 1999-2000, over the preceding year 1998-99, with such exports touching Rs. 4,889/- crore (approx.) & Rs. 5, 178/- crore (approx.) in the financial years 1998-99 & 1999-2000 respectively. Against this position, mill-made cotton fabrics and made-ups recorded an export growth rate of 13.58% (overall) for the year 1999-2000, vis-à-vis the year 1998-99, when such exports touched value figures of Rs. 3,180/- crore (approx.) and Rs. 3,612/- crore (approx.) respectively, in 1998-99 & 1999-2000. The data pertaining to the export of powerloom and mill-made (machine woven) cotton textiles in the last 6 financial years and calendar years, are reflected in the tables 1, 2 & 3 annexed thereto.

3.    During the year under review, the Committee of Administration (Committee) met 6 times on 18/5/1999, 14/7/1999, 18/9/1999, 2/12/1999, 25/1/2000 & 24/3/2000, under the chairmanship of Shri M.S. Mathivanan, to consider and decide on matters concerning the development & export promotion of the fabrics manufactured in the decentralised powerloom sector and the made-ups there-out-of. The Committee was assisted in its task by the following statutory Panels/Committee :-

1) Development & Extension Panel

2) Export Promotion Panel

3) Finance Panel

4) Staff Committee

4.    Shri M.S. Mathivanan, Chairman, in his address on the occasion of the 4th Annual General Meeting of the PDEXCIL held on 18.09.1999, highlighted the need for the modernisation and upgradation of the technology of the small scale powerloom sector which produces around 56% of fabrics in the country, generates considerable exports thereof and caters to the needs of the local garment industry for the domestic market and for the exports thereof from the country. The Chairman, in his address, sincerely thanked the Hon'ble Union Minister for Textiles and all other officers in the Ministry of Textiles for the creation and operationalisation of the Technology Upgradation Fund Scheme (TUFS). He stressed the need for permitting 10 years second hand shuttleless looms without any restriction, reduction in margin money towards promoter's contribution and financing of the powerloom sector without collateral security, towards making the TUFS successful in its implementation. He expected a greater role for the powerloom sector in the new Textile Policy to be announced by the Govt. of India which can lead to development of the textile industry of India. He further stressed on other major areas of concern of the decentralised powerloom industry, such as stagnancy in the share of the Powerloom Exporters' Entitlement (PEE) at 10% of the overall textiles export quota kitty, undue protection being accorded to the handloom sector including by way of reservation of certain items of textiles by it at the expense of the powerloom sector, increased recourse by the developed countries to other protectionist non-tariff barriers, etc., major shift in sources of import due to formation of regional trading blocs and preferential trade treaties by U.S.A. and E.E.C. covering outward processing trade (OPT), etc. apart from slew of other domestic and external factors specifically pertaining to the healthy and harmonious development of the decentralised powerloom sector in India.

5.    The general body [A.G.M.] of the Council has also unanimously passed resolutions adopting the annual report of the Committee, the Council's audited balance-sheet and income & expenditure account for the financial year that ended on the 31st of March, 1999, appointing the auditors and also passed special resolutions, deleting the extant article 4 and article 45 of the Articles of Association of the PDEXCIL and substituting it with a new one thereof and noting the election of the following members to the Committee :-

A) WESTERN REGION :

i) Shri Rukmangad Rajaram Bawne, Ichalkaranji.
ii) Shri Khurshid Ahmed Shabbir Ahmed, Malegaon.
iii) Shri Anwar Ahmed Abdul Aziz, Malegaon.
iv) Shri Mohd. Yusuf Abdullah Shaikh, Malegaon.
v) Shri M.Y. Momin, Bhiwandi.
vi) Shri Purushottam K. Vanga, Bhiwandi.
vii) Shri Jameel Ah. Abdul Ghaffar, Malegaon.

B) SOUTHERN REGION :

i) Shri S. Raghunathan, Komarapalayam, Tamil Nadu (elected uncontested).

6.    The Committee during the year under review took up and made several recommendations to the Govt. of India towards the modernisation and upgradation of the technology of the decentralised powerloom sector and the development and promotion of the exports of the products thereof. Some of the important suggestions made by the Council to the Government are as follows :-

I.   Detailed representations were made to the Director General of Foreign Trade giving the various suggestions for modification in the EXIM policy as well as other suggestions to ease difficulties. The major suggestions are;

(1) To permit import of second hand machinery under the EPCG scheme.
(2) To include a separate chapter on small scale sector in the EXIM policy, listing out the facilities and benefits available to this sector.
(3) Early issuance of customs notification for imports of textile machinery at zero tariff under the EPCG scheme.
(4) DEPB facility to yarn dyed made-ups.
(5) Extension of SIL facility to small exporters.
(6) Classification of unhemmed / unstitched odhnies under fabrics and hemmed / stitched odhnies under made-ups. This was considered by the DGFT.
(7) To restore the threshold limit of 15% from the revised 10% for applying the provision of Present Market Value (PMV) under the DEPB scheme.

II.   (A)   Suggestions for changes and modification for incorporation in the budget proposals 1999-2000 were forwarded to the Government for consideration. The major suggestions covered under our proposals are ;

(1) Duty on stenter machine on chamber basis- Its implications on exports of powerloom process fabrics.
(2) Lowering of rates of interest on export finance.
(3) To continue the provision under section 80 HHC of the Income Tax act with slight modifications wherever it is required.
(4) Introduction of VAT system to provide duty relief on exports products.
(5) To refund fully all duties of Central and State Govts.paid on the inputs on exportation of the finished products.

    (B)   Implications of the Budget Proposals announced for the year 2000-2001 was conveyed to the Ministry of Commerce / Textiles.

III.   Fixation of suitable export targets in respect of cotton powerloom textiles for the year 2000 _ 2001.

IV. The suggestions with regard to quota policy for consideration at the Quota Co-ordination Committee meeting. The major suggestions made were ;

(1) Inclusion of PDEXCIL representative on the Quota Co-ordination Committee.

(2) To extend the PEE quota allotment period in respect of first part upto 30th of September, 2000 in view of the delay in issuing the PEE certificate of allotment.

V. Representations were made to the High Level Committee on the Redressal of Grievances of Exporters on various issues concerning exports;

(1) One of the major issues represented was extension of DEPB facility to cotton made-ups of yarn dyed fabrics for the intervening period between 25th of August, 1999 to 10th of January, 2000.

(2) To refund to the full extent of compounded levy imposed on stenter machine on export of processed materials.

VI. Textile Policy ;

(1) One of the major suggestions made is that there should not be any restriction on production of any textile items by different sectors of the textile industry.

VII. Modification in the Technology Upgradation Fund Scheme ;

Major suggestions indicated below were to soften the terms and conditions of the TUFS for small scale units.

(1) Reduction in the margin money.
(2) Timely payment of interest reimbursement amount when the interest is due.
(3) Extension of moratorium period.
(4) Instead of collateral, security should be limited to hypothecation of the machinery and charge of the factory premises.
(5) To cover working capital also under the TUF scheme.
(6) To permit import of second hand machinery of 10 years old which has since been considered.
(7) Co-option of more number of banks including co-op. banks.

VIII. Handloom Reservation Act -

(1) Suggestions were made to permit manufacture of items in the powerloom sector for export purpose without any restriction.

(2) The generic items should not be covered under the Handloom Reservation Order. The items should be more specific so that reservation order could be implemented effectively without affecting the powerloom sector.

IX. Quantitative Restrictions ;

Representation was made to phase out the removal of quantitative restriction on imports of cotton textile items particularly grey fabrics into India as it affects the domestic textile industry. It was represented to remove the quantitative restrictions in a phased manner to coincide with the date of removal of restriction on imports of textiles from India into western countries.

X. Drawback :

Detailed cost data was furnished to the Dept. of Revenue for fixation of suitable rates of drawback on cotton textile items.

XI. Other Issues :

(1) Suggestions made to the Ministry of Commerce for developing trade with USA, Canada and Latin American Countries.

(2) Material with adequate data for finalising export strategy by the Ministry of Commerce, was furnished.

(3) Material for consideration of Bilateral Trade issues that might come up for discussion during the visit of the President of USA, was furnished.

(4) Implication of the change in the rules of Certificate of Origin adopted by the USA was furnished to the Ministry of Commerce.

(5) Material for discussion at the Trade Policy Review of Peru, Brazil and Canada which is coming up at WTO, was furnished to the Ministry of Commerce, regarding market access impediments in respect of various centres.

(6) Material for consideration at the Trade Policy Review mechanism of the WTO, was furnished to the Ministry of Textiles.

7.    DEVELOPMENTAL ISSUES :

(a) The Council has been regularly organising meetings of the Powerloom Centres Development Committees at the 13 important identified clusters in the country, nteralia after co-ordination with the concerned Textile Research Association and bankers for providing assistance in the modernisation and technology upgradation of the decentralised small scale powerlooms at these centres, amongst other things to the TUFS.

(b) The Council has organised surveys of powerloom centres by the TRA's during the year to find out the various shortcomings/problems in regard to the specific issues at powerloom centres and getting suggestions/remedies for removing the shortcomings from the concerned TRAs' so that action can be taken for the same. Such surveys have been conducted at the following places;

    (i) Survey on yarn dyeing at Malegaon on 5/9/99.
    (ii) Survey on sizing and a seminar thereon at Malegaon on 15/9/99.
    (iii) Survey on yarn dyeing at Dhulia and a seminar thereafter on 21/2/2000.

(c) The in-situ modernisation of attachments for the upgradation of conventional looms duly prepared by the BTRA at the instance and finance of the PDEXCIL was mounted on the plain looms at the Powerloom Service Centre, O/o the TX.C., at Malegaon. A programme for the inauguration of these attachments on 24/7/99 by the Textile Commissioner, MOT, GOI was arranged by the PDEXCIL. Around 150 persons attended the said inauguration and the demonstration of such attachments that followed.

(d) A similar programme of in-situ modernisation of attachments on Non-automatic and automatic looms alongwith demonstration has been initiated by the PDEXCIL at Ichalkaranji, through the BTRA which is expected to be implemented at the BTRA powerloom service centre at Ichalkaranji during the financial year 2000-2001.

I] Development Programmes :

1) Seminars : Quality Upgradation & Export Promotion seminars aimed at giving information about customs, central excise, import-export policies, procedures, quality aspects in production of powerloom textiles, marketing of powerloom products etc. and seminars on Technology Upgradation Fund Scheme alongwith meetings with the bankers, TRA's & powerloom entrepreneurs were organised at the following places;

a) Ujjain

b) Maunath Bhanjan

c) Bangalore

d) Bhiwandi

e) Burhanpur

f) Erode

g) Ichalkaranji

h) Malegaon

i) Calcutta

j) Solapur

k) Dhule

l) Varanasi

m) Salem

n) Surat

o) Chennai

2) Entrepreneurship Development Programmes [EDP] : Entrepreneurship development programmes aimed at fostering entrepreneurial growth in the decentralised powerloom sector are being regularly organised on an ongoing basis by the PDEXCIL office, with the assistance of the Convenors of the concerned PCDCs (of the PDEXCIL) and the jurisdictional Textile Research Associations [TRAs]. 57 such EDPs' imparting training on various subjects such as finance, inventory control, process control & international quality accreditation have since been conducted at the following powerloom centres;

3. (i) The Council participated and sponsored partly the Asia-Pacific Clothing and Textile Industry forum held at New Delhi on the 13th & 14th of December, 1999.

(ii) An interactive meeting of industry representatives, senior officials of the concerned banks and of the Central and Karnataka State Govts,. on the TUFS was organised on 27/7/99 at Bangalore by the PDEXCIL, wherein over 50 persons attended. This meeting was chaired by the Principal Secretary, Industries & Commerce, Govt. of Karnataka and was addressed at length by the E.D., PDEXCIL & Addl. TX.C., GOI.

(iii) Presentation of the survey report prepared by the Textiles Committee on the quality level of fabrics produced at Ichalkaranji : The PDEXCIL had, with due advance publicity locally, in concert with COA members of the Council from Ichalkaranji, arranged on 29/6/99, for a detailed audio-visual presentation of the said survey report prepared by the Textiles Committee. 75 powerloom entrepreneurs/weavers and officers of the BTRA and the local officers of the Textiles Committee had also participated. The PDEXCIL discussed the state of the quality of powerloom fabrics at Ichalkaranji and elaborated on the provisions of the TUFS and the other schemes/programmes of the GOI & the PDEXCIL for the powerloom sector.

(iv) The Council participated in the Open House meets organised by the Office of the Textile Commissioner at the following places;

i)   Bhiwandi
ii)   Ahmedabad
iii)   Ichalkaranji
iv)   Madhavnagar
v)   Solapur
vi)   Burhanpur

(v) The Council is regularly organising meeting between the bankers, TRA's and the powerloom entrepreneurs to further the development programme of modernisation of powerloom units at the various powerloom centres.

(vi) The Council has been consistently making representations to the Ministry of Textiles for relaxation of certain terms and conditions in the TUFS especially for the powerloom sector.

II] Export Promotion Programmes :

(1) The Council participated in the following international textile trade fairs;

(a)	International Fashion Fabric Exhibition (IFFE), USA	-	27-29th April, 1999.
(b)	ITMA'99 fair, Paris	-	02-08th June, 1999.
(c)	Fenit Fair'99, Sao Paulo, Brazil	-	22-25th June, 1999.
(d)	Interstoff (Autumn) Frankfurt	-	04-07th October, 1999.
(e)	Heimtextil'2000, Frankfurt	-	12-15th January, 2000.
(f)	Texstyles India'2000	-	02-05th February, 2000.

(2) Sales-cum-Study Teams [SST] of powerloom textile exporters, supported by the Council official, were sponsored by the Council to the following promising overseas markets;

(a)	Hongkong, Japan & Singapore	-	27th May - 10th June, 1999.
(b)	USA & Canada	-	18th October - 5th November, 1999.

(3) A Market survey for Indian powerloom textiles, viz. fabrics & made-ups, was conducted by our Council at Sri Lanka from 9/9/1999 to 12/9/1999.

(4) Fabric Guide : A "Fabric Guide" is being prepared for second time by the Council. The Fabric Guide will serve as a product reference guide by the Indian Embassies abroad, Chambers of Commerce and Industry, Industry Houses, Importing authorities, Import Promotion Agencies and the Foreign Departmental Stores abroad while making their purchasing decisions. The fabrics displayed in the Fabric Guide will get worldwide exposure and shall be instrumental in obtaining orders for many of our manufacturer-exporters. In addition to the above, it will serve as a good publicity media for marketing the powerloom products. The Indian missions abroad have appreciated the "Fabric Guide" of the PDEXCIL, formally in writing on receipt of the same from the PDEXCIL.

(5) Directory of Members : A "Directory of Members" was brought out by the Council for the second time.

(6)Catalogue exhibition : A catalogue exhibition was organised by the PDEXCIL at Erode on the 5th and 6th of July, 1999. In this exhibition, the catalogues of the weaving machineries available for sale at the ITMA'99 fair held at Paris from the 1st to the 10th of June, 1999 were displayed. Around 300 visitors graced the said exhibition and appreciated the demonstration of the said catalogues at the said exhibition.

(7) The Council has been sending delegations of its members to the MOT, GOI for representing various matters regarding developmental & export promotion of textiles.

(8) The Council projected its various activities in the realms of powerloom development and export promotion, through the media of advertisement, publicity and publications funded by the Council, as spelt out hereinbelow;

a) The Council brought out brochures depicting the Council, its mandate profile/activities for distribution to the trade, industry, importers, buyers, departmental stores, buying agents, import promotion agencies, etc.

b) Publicity of the Council was mounted through advertisements released abroad and in India in various publications/ print media during the fiscal year 1999-2000. The publicity of the Council's activities was supplemented by the support of the press who actively involved themselves by bringing out press communiqué in the concerned newspapers, in the course of the various events of the PDEXCIL round the year.

Membership :

The membership of the Council has, since its inception on 8.9.'95, been on the incline, gradually overtime and stood at 13,500 as on 31.03.2000.